I want to take this opportunity to congratulate Sherry Vinton, who has been selected by Gov.-elect Jim Pillen to become the next director of agriculture. Sherry is a great choice and, for the first time in many years, we will have a director of agriculture who has strong Sandhills roots and is an active rancher. This is great news for our state!
Just as Pillen is preparing his administration, so are state senators getting ready for the 2023 legislative session. The first session of the 108th Nebraska Legislature will begin Jan. 4.
I spent this past week attending new senator orientation and the annual Legislative Council meeting.
The orientation was a great opportunity to meet all my new colleagues and get to know them on a more personal level.
The Legislative Council meeting included all of the returning state senators along with the newly elected senators. The meeting was primarily focused on getting an update on some of the larger issues we will be facing once the session begins. Budget and tax issues will be based on the latest budget forecast from the most recent forecast estimates from the Tax Rate Review Committee. The numbers predict revenues will continue to outpace expectations and push the general fund and the cash reserve fund in excess of allowable balances. On the surface, this is a great problem to have, but it is critical we deplete the reserves in a responsible manner. The taxpayer must be the first priority.
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The general fund is essentially the state’s checking account, while the cash reserve fund is more akin to a savings account. The cash reserve is commonly referred to as the “rainy day fund” and is statutorily limited to a balance of no more than $1 billion. The latest forecast — should it prove to be accurate — predicts a balance of $2.3 billion. What caused the fund to grow to this level over the past two years? And more importantly, what can we expect the fund to do in the future?
We can thank post-COVID spending for the boost in state revenues. Federal pandemic relief dollars and the PPP loans that were ultimately forgiven created a huge economic boost to all states and resulted in unprecedented increases in tax receipts. However, this will not be case in the coming biennium. The rapid rise in inflation has caused the Federal Reserve to significantly raise the federal funds rate in order to slow the economy. Many expect the economy will go into a recession in the near future. The severity of the recession is unknown at this time, but either way, reduced tax revenues will be the likely result.
Even with the uncertainty of future tax collections, we need to focus on fixing the school funding formula to help bring further reductions in property taxes. This will likely be a priority in Pillen’s budget and is certainly a focus of many senators. In addition to new property tax relief, I will be focused on protecting the existing income tax credits and the elimination of the Social Security tax codified in LB873 last session.
As for reducing our general fund and cash reserve fund, the Legislature should look for one-time spends as it did with American Rescue Plan Act dollars, rather than creating new programs that will have an ongoing fiscal note. We may also need to reallocate ARPA dollars from any projects that were determined not to qualify for their initial allocations.
One project I would like to secure funding for in District 42 is rebuilding the 4-H Camp near Halsey that was lost in the Bovee Fire. I am working closely with Sen. Tom Brewer, the University of Nebraska and the 4-H Foundation to determine the vision and scope of the rebuilding project and develop a funding strategy. I made it clear in my campaign that bringing more investment back to District 42 was a priority of mine, and keeping existing assets in our district is step one.
I am putting the finishing touches on several bills that I intend to introduce when the next session begins. All bills must be introduced in the first 10 days of the session. If you have ideas for legislation, please reach out to me or my staff at email@example.com or 402-471-2729. My door is always open!